The missing rich households and wealth polarization in 21st century China

This study investigates the evolution of wealth polarization throughout the 21st century, using data from the Chinese Household Income Project (CHIP) and the Top Incomes in China (TIC) database. Our findings reveal a significant increase in polarization from 2002 to 2013, followed by a period of stabilization and signs of moderation by 2018. Decomposing polarization into alienation and identification, we observe that alienation (between group inequality) continues to rise from 2002 to 2018, while identification (within group cohesion) increases until 2013 but declines thereafter. The underrepresentation of rich households leads to an underestimation of alienation and an overestimation of identification. While these counterbalancing effects contribute to higher polarization levels, they do not alter the trend during the period. However, as the mitigating effect on identification diminishes and the growing effect on alienation intensifies, it suggests potential challenges in accurately tracking future changes in wealth polarization using survey data. • Wealth polarization increases significantly between 2002 and 2013. • Wealth polarization remains steady between 2013 and 2018. • The missing rich does not alter the trend during the study period. • The wealthiest households pose a challenge in assessing polarization.